Pricewaterhousecoopers, L.L.P. v. Jitendra Bhatia

• Court: Court of Appeals for the Second Circuit
• Decided: June 26, 2014
• Docket: 13-1642-cv
• Status: Published

Opinion

13‐1642‐cv Pricewaterhousecoopers, L.L.P. et al. v. Jitendra Bhatia, et al.

1 In the 2 United States Court of Appeals 3 For the Second Circuit 4 ________ 5 6 AUGUST TERM 2013 7 No. 13‐1642‐cv 8 9 JITENDRA BHATIA, KISHANCHAND BHATIA, JAYSHREE BHATIA, 10 MANDAKINI GAJARIA, ABN AMRO LIFE S.A., BAHIA DEL RIO S.A., 11 BEVINGTON MANAGEMENT, LTD., CALWELL INVESTMENT S.A., 12 DIAMOND HILLS INC., HEDGE STRATEGY FUND LLC, KIVORY 13 CORPORATION, MIGUEL LOMELI, NORTH CLUB, INC., MORNING MIST 14 HOLDINGS LIMITED, PFA PENSION A/S, TAURUS THE FOURTH LTD., 15 ZENN ASSETS HOLDING, LTD., CARLOS MATTOS, CHANDRASHEKAR 16 GUPTA, DEEPA GUPTA, ULRICH BLASS, ROBERTO CIOCI, SANDRA 17 MARCHI CIOCI, JOHN PAUL DOUGHERTY, E. THOMAS DOUGHERTY 18 NOVELLA, MUNIANDY NALAIAH, LILA NEEMBERRY, PETER A. & 19 RITA M. CARFAGNA IRREVOCABLE CHARITABLE REMAINDER UNITRUST, 20 MOSHE PODHORZER, R. WICKNESWARI V. RATNAM, ENRIQUE SANTOS, 21 ENRIQUE SANTOS CALDERON, JACQUELINE URZOLA, JOSEFINA SANTOS 22 URZOLA, FELIPE J. BENAVIDES, FUNDACION VIRGILIO BARCO, DAVID 23 HOPKINS, CATALINA MEJIA, CESAR MEJIA MEJIA, R.M. RADEMAKER, 24 THE ALPHA AND OMEGA PARTNERSHIP, LP, RICHMON COMPANY LTD., 25 POSITANO INVESTMENT LTD., PACIFIC WEST HEALTH MEDICAL CENTER 26 INC. EMPLOYEES RETIREMENT TRUST, ON BEHALF OF ITSELF, PACIFIC 27 WEST HEALTH MEDICAL CENTER INC. EMPLOYEES RETIREMENT TRUST, 28 ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, SHIMON LAOR, DAVID 29 I. FERBER, FRANK E. PIERCE, FRANK E. PIERCE IRA, NADAV ZOHAR, 30 ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, 31 RONIT ZOHGR, FAIRFIELD SENTRY LTD., HEADWAY INVESTMENT CORP., 32 BPV FINANCE (INTERNATIONAL) LTD., JOSE ANTONIO PUJALS, 33 INDIVIDUALLY AND IN THEIR REPRESENTATIVE CAPACITIES FOR ALL No. 13‐1642‐cv

1 THOSE SIMILARLY SITUATED, ROSA JULIETA A DE PUJALS, INDIVIDUALLY 2 AND IN THEIR REPRESENTATIVE CAPACITIES FOR ALL THOSE SIMILARLY 3 SITUATED, MARIDOM LIMITED, A FOREIGN CORPORATION, RICARDO 4 LOPEZ, STANDARD CHARTERED BANK INTERNATIONAL (AMERICAS) 5 LIMITED, STANCHART SECURITIES INTERNATIONAL, INC., MARIA AKRIBY 6 VALLADOLID, RICARDO RODRIGUEZ CASO, WONG YUK HING DE LOU, 7 MOISES LOU MARTINEZ, JOAQUINA TERESA BARBACHA HERRERO, SAND 8 OVERSEAS LIMITEDSAND OVERSEAS LIMITED, BLOCKBEND LTD, 9 EASTFORK ASSETS LTD, GERICO INVESTMENTS, INC., ALICIA GAVIRIA 10 RIVERA, EDUARDO CHILD ESCOBAR, MAILAND INEVSTMENT INC., 11 ARJAN MOHANDAS BHATIA, TRADWAVES, LTD., PARASRAM DARYANI, 12 NEELAM P. DARYANI, VIKAS P. DARYANI, NIKESH P. DARYANI, 13 ASHOKKUMAR DAMODARDAS RAIPANCHOLIA, PRERNA VINOD 14 UTTAMCHANDANI, KISHIN MOHANDAS BHATIA, SURESH M. BHATIA, 15 BHARAT MOHANDAS, AARVEE LTD., KISHU NATHURMAL 16 UTTAMCHANDANI, VANDNA PATEL, RAJESHKUMAR DAMODARDAS 17 RAIPANCHOLIA, DILIP DAMODARDAS RAIPANCHOLIA,RAJENDRAKUMAR 18 PATEL, SECURITIES & INVESTMENT COMPANY BAHRAIN, HAREL 19 INSURANCE COMPANY, LTD., AXA PRIVATE MANAGEMENT, 20 ST. STEPHEN’S SCHOOL, PACIFIC WEST HEALTH MEDICAL CENTER, INC. 21 EMPLOYEE’S RETIREMENT TRUST, PASHA S. ANWAR, ON BEHALF OF 22 THEMSELVES AND ALL OTHERS SIMILARLY SITUATED INVESTORS IN THE 23 GREENWICH SENTRY, L.P. PRIVATE INVESTMENT LIMITED PARTNERSHIP, 24 JULIA ANWAR, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY 25 SITUATED INVESTORS IN THE GREENWICH SENTRY, L.P. PRIVATE 26 INVESTMENT LIMITED PARTNERSHIP, INTERAMERICAN TRUST, 27 ELVIRA 1950 TRUST, BONAIRE LIMITED, CARLOS GAUCH, WALL STREET 28 SECURITIES, S.A., BANCO GENERAL, S.A., HARVEST DAWN 29 INTERNATIONAL INC., EL PRADO TRADING, OMAWA INVESTMENT 30 CORPORATION, CARMEL VENTURES LTD., TRACONCORP, BLYTHEL 31 ASSOCIATED CORP., MARREKESH RESOURCES, CENTRO INSPECTION 32 AGENCY, KALANDAR INTERNATIONAL, LANDVILLE CAPITAL

2 No. 13‐1642‐cv

1 MANAGEMENT S.A., 20/20 INVESTMENTS, AXA PRIVATE MANAGEMENT 2 DIVERSIFIED INVESTMENTS ASSOCIATES CLASS A UNITS, ABR CAPITAL 3 FIXED OPTION/INCOME STRATEGIC FUND LP, HAREL INVESTMENT AND 4 FINANCIAL SERVICES LTD ., GOPAL BHATIA, THE KNIGHT SERVICES 5 HOLDINGS LIMITED, ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY 6 SITUATED, 7 8 Plaintiffs‐Appellees, 9 10 v. 11 12 CORINA NOEL PIEDRAHITA, WALTER M. NOEL, JR., ANDRES 13 PIEDRAHITA, JEFFREY TUCKER, AMIT VIGAYVERGIA, FAIRFIELD 14 HEATHCLIFF CAPITAL LLC, YANKO DELLAW SCHIAVA, PHILIP TOUB, 15 LOURDES BARRENECHE, CORNELIS BOELE, VIANNEY DʹHENDECOURT, 16 HAROLD GREISMAN, JACQUELINE HARARY, DAVID HORN, RICHARD 17 LANDSBERGER, DAVID LIPTON, JULIA LUONGO, MARK MCKEEFRY, 18 MARIA TERESA PULIDO MENDOZO, CHARLES MURPHY, SANTIAGO 19 REYES, ANDREW SMITH, FAIRFIELD GREENWICH (BERMUDA) LIMITED, 20 FAIRFIELD GREENWICH ADVISORS, L.L.C., DANIEL LIPTON, ROBERT 21 BLUM, GREGORY BOWES, FAIRFIELD RISK SERVICES LTD., FAIRFIELD 22 GREENWICH LIMITED, A CAYMAN ISLAND COMPANY, FAIRFIELD 23 GREENWICH GROUP, FAIRFIELD GREENWICH (BERMUDA) LTD., 24 25 Defendants‐Appellees, 26 27 v. 28 29 CITCO FUND SERVICES (EUROPE) B.V., PRICEWATERHOUSECOOPERS 30 L.L.P., CITCO FUND SERVICES (BERMUDA) LIMITED, THE CITCO GROUP 31 LIMITED, CITCO BANK NEDERLAND N.V. DUBLIN BRANCH, CITCO

3 No. 13‐1642‐cv

1 CANADA INC., PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V., CITGO 2 GLOBAL CUSTODY N.V., 3 4 Defendants‐Appellants, 5 6 v. 7 8 1‐20 JOHN DOES, BRIAN FRANCOUER, PRICEWATERHOUSECOOPERS 9 BERMUDA, IAN PILGRIM, PRICEWATERHOUSECOOPERS ACCOUNTANTS 10 NETHERLANDS N.V., LION FAIRFIELD CAPITAL MANAGEMENT LIMITED, 11 CARLOS GADALA‐MARIA, RAUL MAS, ROBERT FRIEDMAN, RODOLFO 12 PAGES, JOHN G. DUTKOWSKI, LUISA SERENA, MIGUEL CALVO,SAMUEL 13 PERRUCHOUD, EFG CAPITAL INTERNATIONAL CORP., MATTHEW C. 14 BROWN, GLOBEOP FINANCIAL SERVICES LLC., GREENWICH SENTRY, 15 L.P., FAIRFIELD SENTRY LIMITED, PRICEWATERHOUSECOOPERS 16 INTERNATIONAL LIMITED, PRICEWATERHOUSECOOPERS LLP (US), 17 PRICEWATERHOUSECOOPERS LLP CHARTERED ACCOUNTANTS, 18 FAIRFIELD INTERNATIONAL MANAGERS, INC., STANDARD CHARTERED 19 PLC, AMERICAN EXPRESS BANK LTD, STANDARD CHARTERED PRIVATE 20 BANK, STANDARD CHARTERED BANK INTERNATIONAL (AMERICAS) 21 LIMITED, STANDARD CHARTERED BANK, STANDARD CHARTERED BANK 22 INTERNATIONAL (AMERICAS) LIMITED, FAIRFIELD GREENWICH CORP., 23 24 Defendants.1 25 26 ________ 27

1 The Clerk of Court is respectfully directed to amend the official caption in this case to conform with the caption above .

4 No. 13‐1642‐cv

1 Appeal from the United States District Court 2 for the Southern District of New York. 3 No. 9‐CV‐118 ― Victor Marrero, Judge. 4 ________ 5 6 ARGUED: NOVEMBER 22, 2013 7 DECIDED: JUNE 26, 2014 8 ________ 9 10 Before: JACOBS, PARKER, AND CHIN, Circuit Judges. 11 ________

12 An appeal from a judgment of the United States District Court 13 for the Southern District of New York (Marrero, J.) approving the 14 settlement of putative class action securities claims against certain 15 defendants over the objections of non‐settling defendants. 16 Dismissed.

17 ________

18 DAVID A. BARRETT (HOWARD L. VICKERY, II, 19 STUART H. SINGER, CARLOS SIRES, SASHI BACH 20 BORUCHOW, Boies, Schiller & Flexner LLP; ROBERT 21 C. FINKEL, JAMES A. HARROD, Wolf Popper LLP; 22 CHRISTOPHER LOVELL, VICTOR E. STEWART, Lovell 23 Stewart Halebian Jacobson LLP, on the brief), 24 Boies, Schiller & Flexner LLP, New York, NY, for 25 Plaintiffs‐Appellees.

26 MARK G. CUNHA, Simpson Thacher & Bartlett 27 LLP, New York, NY, for Defendants‐Appellees.

5 No. 13‐1642‐cv

1 CHRISTOPHER LANDAU (TIMOTHY A. DUFFY, EMILY 2 P. HUGHES, Kirkland & Ellis LLP; WILLIAM R. 3 MAGUIRE, SARAH L. CAVE, Hughes Hubbard & 4 Reed LLP; WALTER RIEMAN, Paul, Weiss, Rifkind, 5 Wharton & Garrison LLP, on the brief) Kirkland & 6 Ellis LLP, Washington, DC, for Defendants‐ 7 Appellants.

8 ________

9 BARRINGTON D. PARKER, Circuit Judge:

10 This appeal requires us once again to grapple with the 11 aftermath of the Ponzi scheme run by Bernard L. Madoff. 12 Defendants‐Appellants PricewaterhouseCoopers and Citco 2 13 (collectively, the “Non‐Settling Defendants”) seek to overturn a 14 partial final judgment entered in the United States District Court for 15 the Southern District of New York (Marrero, J.) approving the 16 settlement of certain putative class action claims. The settled claims 17 were brought by Plaintiffs‐Appellees (the “Investor Plaintiffs”) who 18 were individual and institutional investors in so‐called Madoff 19 feeder funds managed by the Fairfield Greenwich Group.3 The 20 claims were brought against the Group as well as its directors and

2 “PricewaterhouseCoopers” consists of defendants PricewaterhouseCoopers LLP [Canada] and PricewaterhouseCoopers Accountants Netherlands N.V. “Citco” consists of defendants Citco Fund Services (Europe) B.V., Citco (Canada) Inc., Citco Bank Nederland N.V. Dublin Branch, Citco Global Custody N.V., Citco Fund Services (Bermuda) Ltd., and The Citco Group Limited. 3 The Fairfield Greenwich Group includes funds managed by Fairfield Greenwich (Bermuda) Limited, Fairfield Greenwich Advisors, L.L.C., Fairfield Risk Services LTD., Fairfield Greenwich Limited, Fairfield Greenwich Group, Fairfield Greenwich (Bermuda) LTD.

6 No. 13‐1642‐cv

1 officers (collectively, the “Fairfield Greenwich Defendants” or the 2 “Settling Defendants”).

3 The Non‐Settling Defendants challenge one particular 4 provision in the settlement agreement that provides that investors 5 who file claims under the settlement submit to the district court’s 6 jurisdiction for the sole purpose of participating in the settlement 7 and not for any other purpose. The Non‐Settling Defendants 8 contend that the district court erred in approving this provision 9 because district courts cannot permit litigants to agree to insulate 10 themselves from personal jurisdiction if it would otherwise be 11 created as a result of the settlement.

12 In response, the Investor Plaintiffs contend, among other 13 things, that the Non‐Settling Defendants lack standing to lodge this 14 objection. The Non‐Settling Defendants counter that they have 15 standing because the provision in question prejudices their rights to 16 assert that participation in the settlement should bar or limit investor 17 claims against them in other litigation. Because we conclude that the 18 Non‐Settling Defendants do not have standing to challenge the 19 settlement, we dismiss the appeal.

20 I.

21 Plaintiffs‐Appellees invested money in funds sponsored and 22 managed by the Fairfield Greenwich Group, which in turn invested 23 substantially all of its assets with Bernard L. Madoff Investment 24 Securities LLC. After discovering that their investments were lost as 25 a result of Madoff’s fraudulent scheme, Investor Plaintiffs brought a 26 putative class action asserting federal securities and state common 27 law claims against the Fairfield Greenwich Defendants, their outside 28 public accountants, PricewaterhouseCoopers, and Citco and

7 No. 13‐1642‐cv

1 GlobeOp Financial Services, LLC,4 which provided various 2 professional services to the funds. In addition to restitution of the $5 3 billion Investor Plaintiffs alleged that they, as a class lost, as a result 4 of Madoff’s fraudulent scheme, the complaint sought consequential 5 and punitive damages as well as disgorgement of profits 6 purportedly obtained by the defendants.

7 Following protracted motion practice,5 the Investor Plaintiffs 8 and the Fairfield Greenwich Defendants engaged in settlement 9 negotiations and in November 2012 moved for the preliminary 10 approval of a settlement they had reached. The settlement 11 purported to resolve all claims between the Investor Plaintiffs and 12 the Fairfield Greenwich Defendants.

13 As Plaintiffs’ motion for class certification had not been 14 adjudicated,6 the proposed preliminary approval order defined a 15 settlement class (the “Settlement Class”)7 and provided that its 16 members had the right to request exclusion from the class. The 4 Defendant GlobeOp Financial Services, LLC has entered into its own settlement with Plaintiffs. See Dist Ct. No. 09‐118, Dkt. 1232. 5 See, e.g., Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 354 (S.D.N.Y. 2010); Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 372 (S.D.N.Y. 2010). 6 In February 2013, the district court granted in part and denied in part Plaintiffs’ motion for class certification, excluding from the class investors in 25 countries, which it found had not been shown likely to give preclusive effect to an opt‐out class judgment. Anwar v. Fairfield Greenwich Ltd., 289 F.R.D. 105, 121 (S.D.N.Y. 2013). This court recently vacated the class certification order as to claims against the Non‐Settling Defendants and remanded for further findings on the Rule 23 requirements as they pertain to the claims asserted against each of the Non‐Settling Defendants. See Anwar v. Fairfield Greenwich Ltd., Nos. 13‐2340, 13‐ 2345, 2014 U.S. App. LEXIS 11515 (June 19, 2014). 7 The Settlement Class was defined principally as “all Persons who were Beneficial Owners of shares or limited partnership interests in the Funds as of December 10, 2008 (whether as holders of record or traceable to a shareholder or limited partner account of record) and who suffered a Net Loss of principal invested in the Funds.” See Joint App’x 273.

8 No. 13‐1642‐cv

1 proposed order also provided that those investors who wished to 2 remain in the class could file proofs of claim in order to share in the 3 distribution of the settlement proceeds.

4 Paragraph 17 of the proposed order further provided that 5 Settlement Class members who filed proofs of claim would submit 6 to the district court’s jurisdiction as follows:

7 Any Settlement Class Member who submits a Request for 8 Exclusion or a Proof of Claim thereby submits to the 9 jurisdiction of the Court with respect to the subject matter 10 thereof and all determinations made by the Court thereon.

11 Joint App’x 311 ¶ 17.

12 Following the filing of the motion for preliminary approval of 13 the settlement, the putative class representatives were approached 14 by several putative Settlement Class members who expressed 15 concern that, as foreign individuals and entities, participation in the 16 Settlement Class could subject them to clawback actions in United 17 States courts by Irving Picard, the SIPC Trustee for Bernard L. 18 Madoff Investment Securities, LLC, and Kenneth Krys, the court‐ 19 appointed Liquidator of Fairfield Sentry Ltd., seeking to recover 20 monies they may have directly or indirectly received through the 21 Fairfield Greenwich Group from Madoff. In response to these 22 concerns, on the eve of the preliminary approval hearing, the 23 settling parties submitted an amended proposed order purporting to 24 limit the district court’s jurisdiction over Settlement Class members. 25 Paragraph 17 of the preliminary approval order was amended to 26 state in relevant part:

27 [A]ny Settlement Class Member who submits a Proof of 28 Claim thereby submits to the jurisdiction of this Court with

9 No. 13‐1642‐cv

1 respect only to the subject matter of such Proof of Claim and 2 all determinations made by this Court thereon and shall not 3 be deemed to have submitted to the jurisdiction of this Court 4 or of any court in the United States for any other matter on 5 account of such submission.

6 Joint App’x 415 ¶ 17 (emphasis added).

7 At the hearing, the Non‐Settling Defendants objected to the 8 amended language on the ground that class members who 9 submitted to the court’s jurisdiction in order to accept the terms of 10 the settlement could not, at the same time, be permitted to limit the 11 legal consequences of doing so. The Non‐Settling Defendants 12 contended that they were currently facing claims in litigation in the 13 Netherlands and were entitled to argue that any entity that 14 participated in the New York settlement could not pursue claims in 15 any other jurisdiction. The district court overruled the objections 16 and approved the amended preliminary settlement order.

17 Following the end of the notice period, the Investor Plaintiffs 18 moved for final approval of the settlement. Over the objections of 19 the Non‐Settling Defendants, the district court entered the final 20 order approving the settlement and entering partial final judgment 21 with respect to Investor Plaintiffs’ claims against the Fairfield 22 Greenwich Defendants (the “Final Order”). Paragraph 28 of the 23 Final Order contained language identical to paragraph 17 of the 24 amended preliminary order providing that Settlement Class 25 members who submit proofs of claim only submit to the jurisdiction 26 of the district court with respect to the subject matter of the proof of 27 claim. Special App’x 13. This appeal followed.

10 No. 13‐1642‐cv

1 II.

2 Plaintiffs contend that the Non‐Settling Defendants do not 3 have standing to appeal the Final Order. The question of standing is 4 a “threshold determinant[ ] of the propriety of judicial intervention.” 5 Warth v. Seldin, 422 U.S. 490, 518 (1975). Although we generally 6 review a district court’s approval of a settlement for abuse of 7 discretion, McReynolds v. Richards‐Cantave, 588 F.3d 790, 800 (2d Cir. 8 2009), we review de novo the issue of whether the Non‐Settling 9 Defendants have standing to bring this appeal, see Denney v. 10 Deutsche Bank AG, 443 F.3d 253, 262 (2d Cir. 2006); Shain v. Ellison, 11 356 F.3d 211, 214 (2d Cir. 2004).

12 Over the years, the Supreme Court has articulated the 13 standard by which the “irreducible constitutional minimum of 14 standing” is established. Lexmark Intʹl, Inc. v. Static Control 15 Components, Inc., 572 U. S. ___, 134 S. Ct. 1377, 1386 (2014) (quoting 16 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). A party must 17 have suffered an injury‐in‐fact, that is, the invasion of a “legally 18 protected interest” in a manner that is “concrete and particularized” 19 and “actual or imminent, not conjectural or hypothetical.” Lujan, 504 20 U. S. at 560 (internal quotation marks omitted). Moreover, the injury 21 must be “fairly traceable” to the alleged conduct and it must be 22 likely that the injury will be redressed by a favorable decision. Id. at 23 560‐61.

24 The standing requirements ensure that judicial resources are 25 “devoted to those disputes in which the parties have a concrete 26 stake.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 27 167, 191 (2000). Consequently, we have observed that a non‐settling 28 defendant generally lacks standing to object to a court order 29 approving a partial settlement because a non‐settling defendant is

11 No. 13‐1642‐cv

1 ordinarily not affected by such a settlement. Zupnick v. Fogel, 989 2 F.2d 93, 98 (2d Cir. 1993). This rule advances the policy of 3 encouraging the voluntary settlement of lawsuits. See id.; Waller v. 4 Fin. Corp. of Am., 828 F.2d 579, 583 (9th Cir. 1987).

5 However, there is a recognized exception to this general rule 6 which permits a non‐settling defendant to object where it can 7 demonstrate that it will sustain some formal legal prejudice as a 8 result of the settlement. Zupnik, 989 F.2d at 98; see also Smith v. 9 Arthur Andersen LLP, 421 F.3d 989, 998 (9th Cir. 2005); Weinman v. 10 Fid. Capital Appreciation Fund (In re Integra Realty Res., Inc.), 262 F.3d 11 1089, 1102 (10th Cir. 2001); In re Vitamins Antitrust Class Actions, 215 12 F.3d 26, 31 (D.C. Cir. 2000); Eichenholtz v. Brennan, 52 F.3d 478, 482 13 (3d Cir. 1995); Agretti v. ANR Freight Sys., Inc., 982 F.2d 242, 247‐48 14 (7th Cir. 1992).

15 The Non‐Settling Defendants contend that paragraph 28 of the 16 Final Order causes them such prejudice because it “effectively strips 17 them of defenses against the settling plaintiffs in other fora, 18 including defenses based on duplicative litigation and preclusion.” 19 Brief of Defendants‐Appellants (“App. Br”) at 11 (emphasis added). 20 This allegation, however, does not rise to the required level of formal 21 legal prejudice necessary for standing. That level exists only in those 22 rare circumstances when, for example, the settlement agreement 23 formally strips a non‐settling party of a legal claim or cause of action, 24 such as a cross‐claim for contribution or indemnification, invalidates 25 a non‐settling party’s contract rights, or the right to present relevant 26 evidence at a trial. See Denney, 443 F.3d at 273 (reviewing challenge 27 where settlement included a bar order prohibiting claims against 28 settling defendants); Gerber v. MTC Elec. Techs. Co., Ltd., 329 F.3d 297, 29 305 (2d. Cir. 2003); see also Alumax Mill Prods., Inc. v. Congress Fin. 30 Corp., 912 F.2d 996, 1002 (8th Cir. 1990) (finding standing where

12 No. 13‐1642‐cv

1 settlement dismissed cross‐claims with prejudice); Dunn v. Sears, 2 Roebuck & Co., 639 F.2d 1171, 1173–74 (5th Cir. 1981) (reviewing 3 challenge where settlement made potential witnesses unavailable to 4 remaining defendants).

5 Nothing in the Final Order precludes the Non‐Settling 6 Defendants from asserting in the district court or in other litigation 7 any claims or defenses that may be available to them. Similarly, 8 nothing in that order requires that they forbear from asserting in the 9 Dutch proceedings, or in any future proceedings in other courts, that 10 participation in the settlement approved by the district court bars 11 subsequent or parallel proceedings. See Zupnick, 989 F.2d at 98‐99 12 (expressing skepticism that non‐settling defendants claims were 13 foreclosed where the stipulations of settlement purported to 14 extinguish “any and all claims . . . that have been, could have been, 15 or in the future might be asserted” by non–settling defendants, 16 because the agreements were not binding on them). The Non‐ 17 Settling Defendants implicitly concede as much stating: “Paragraph 18 28 undercuts that argument, as well as appellants’ ability to invoke 19 preclusion defenses in the Dutch actions (or any other actions) based 20 on the outcome of this case.” App. Br. at 13 (emphasis added). It is 21 not, however, sufficient for the Non‐Settling Defendants to show 22 that they were somehow “undercut” through the loss of some 23 practical or strategic advantage. As we have stated, to succeed they 24 must show formal legal prejudice. They have not done so.

25 Finally, we note that the Non‐Settling Defendants have 26 already invoked the “preclusion defenses” in the Dutch proceedings. 27 To us, that is a significant demonstration that nothing in the Final 28 Order prevents or limits them from continuing to assert that 29 Settlement Class members’ participation in the settlement bars, 30 limits, or otherwise impacts claims against them in other

13 No. 13‐1642‐cv

1 jurisdictions. Moreover, in any proceedings to which they are 2 proper parties, the Non‐Settling Defendants are free to argue that 3 paragraph 28 of the Final Order is invalid and lacks preclusive effect 4 against them.

5 In reaching this result, we join our sister courts in holding that 6 a settlement which does not prevent the later assertion of a non‐ 7 settling party’s claims (although it may spawn additional litigation 8 to vindicate such claims), does not cause the non‐settling party 9 “formal” legal prejudice. See, e.g., Agretti, 982 F.2d at 247‐48 10 (concluding that a party did not have standing to challenge a 11 settlement agreement in which a co‐defendant agreed to declare the 12 contract void because the non‐settling party retained the right to 13 assert that the contract was valid and enforceable, despite the 14 obvious practical burden of having its contractual partner disavow 15 the contract); New Mexico ex rel. Energy & Minerals Dep’t v. U.S. Dep’t 16 of Interior, 820 F.2d 441, 444‐45 (D.C. Cir. 1987) (holding that the 17 Navajo Tribe’s challenge to a provision of a settlement which 18 purported to clarify the Secretary’s position on whether allotments 19 to individual Indians of lands which lie outside the undisputed 20 boundaries of the Navajo Reservation were “Indian lands” was 21 properly dismissed because the Tribe was not bound by the 22 settlement and the Tribe could raise their legal objections in 23 subsequent litigation).

24 For these reasons, we conclude that the Non‐Settling 25 Defendants do not have standing to object to the settlement. In view 26 of this conclusion, we decline to address the remaining issues 27 argued on appeal.

28 CONCLUSION

29 We dismiss the appeal for lack of standing.